Travel Quarterly Statement: Q2 2017

Tourism demand on course, but faces headwinds

The outlook for global travel and tourism demand remains on track, based on the latest quarterly update published in the Travel Forecast Model for Q2 2017, although there are some major headwinds that are buffeting the industry.

The Trump factor undermines potential

President Trump’s erratic approach to trade and immigration policies has led to a 0.8% downgrade in the US’s forecast outlook for inbound tourism, as doubt hangs over the US and its relations with its NAFTA trading partners. The travel restriction imposed on six Muslim countries has garnered negative coverage.

UK terror threat will not thwart the boom

The UK witnessed multiple terror attacks in London and Manchester in the last quarter, with the Travel Forecast Model predicting a potential shortfall of 270,000 arrivals in 2017. It is usual for there to be a sharp contraction in demand in the year of an attack, followed by a bounce-back.

Reversal of fortunes for France

The latest quarterly data for France has been upgraded to show that arrivals to France will recover by 2018, two years earlier than originally predicted, as the pace of tourism recovery picks up speed, following the wave of terror since 2015.

Constricting demand is counter-intuitive

Re-imposing US-Cuba restrictions and severing ties with Qatar by Saudi Arabia and others is seen as a counter-intuitive move, as these restrictions cut off a valuable source of revenue from destinations.

China a welcome source of resilient demand

In uncertain times, China offers a large and resilient source of outbound tourism demand. Even in a worst case scenario of a China hard landing, Chinese departures are expected to grow by a 4.2% CAGR over 2017-2020, rather than the baseline forecast of a 8.2% CAGR .

Externalities as a distraction

The various flashpoints of geopolitical tension may prove to be a distraction from more serious factors that will undermine future tourism demand, such as constrained growth in the world’s major outbound markets of the US and UK.